Don't panic, don't sell -- save and network

(CNN) -- With Wall Street operating on a bungee cord and economists hollering about recession, it would be easy to give into panic and sell all your stocks. But CNN personal finance editor Gerri Willis says selling now would be dropping your money in the wrong direction.

CNN personal finance editor Gerri Willis says now is the time to buy stocks.

"Don't try to catch a falling knife -- look it's an old Wall Street saying," says Willis, explaining how you will get hurt. "If you try to sell into stock rout with everyone selling, you're going to get the worst price possible."

The smarter thing is to buy low and sell high. She says you should be putting money into the market now, taking advantage of current low stock prices. She also advises dollar-cost investing -- putting in a little money regularly into the market to average out the cost. "This is the time to reduce the cost of your portfolio."

It is also a good time to check to see if you have broad diversification.

"That means you're not just invested in U.S. stocks -- domestic equities like the Dow Jones Industrial Average or the S&P 500 -- you own international stocks. You're playing a little bit in every market and you own bonds as well as stocks."

Bottom line: Don't panic over bounces in the market and don't try to play the market for big gains or to avoid temporary losses.

You face bigger threat than falling markets

But before you spend a lot of time worrying about your 401(k), you should spend some time thinking about your savings account.

"The biggest threat to consumers from a recession is losing your job," warns Willis. "That's what happens when the economy contracts -- employers start cutting head counts."

She says everyone should have enough money in savings to cover three to six months worth of bills. "One smart thing to do is to put that cash aside in a high-yield savings account so you'll be making money, so it's not just sitting there earning nothing at all."

And don't dismiss a method of savings your grandmother might have used -- certificates of deposit.

"This very strange market has created some interesting opportunities," says Willis. "Short-term CDs -- three- to six-month certificates -- are bearing the same rate as five-year CDs, which is highly unusual. It's because bankers are trying desperately to accumulate assets and bring money in the door. You should take advantage of their trouble by buying some of these CDs and locking it at the same rate as if you were buying five-year CDs."

You also want to make sure you're well-positioned at work, so your boss knows your name. Willis says you're working on the most important projects at work so you're high-profile.